Pakistan arrests loan defaulters, including McDonald's co-owner

By

SHAHID IQBAL

KARACHI, Pakistan, May 9 -- Pakistan arrested two major industrialists, one of who co-owns fast-food chain McDonald's in the country, Tuesday for failing to pay back loans they borrowed from various banks.

Brothers Sultan and Amin Lakhani were arrested on the orders of the federal government, which is launching a fresh campaign against the defaulters, reports a Karachi newspaper, The Star.

They were picked by Pakistan's Federal Investigation Agency on the instructions of the National Accountability Bureau, formed recently to probe financial fraud by the rich and powerful.

The two brothers own Pakistan's Lakson group of companies that gives 11 billion rupees of annual income tax to the government.

Their arrest shows that the government was serious about recovering the loans, the Star report said. Sultan Lakhani was arrested from Islamabad while his brother Amin Lakhani was held in Karachi. Sultan came to Islamabad in March to negotiate outstanding loans with the federal government but apparently the talks produced no results.

The Lakhanis are also business partners of Hassan Nawaz, the son of the deposed Prime Minister Nawaz Sharif, and the two jointly own McDonald's chain in Pakistan.

Loan default is a chronic problem in Pakistan where influential people often fail to return loans they borrow from local banks and other financial institutions. Pakistan's military government, which toppled Sharif on Oct. 12 for alleged corruption and inefficiency, has launched a major campaign against the loan defaulters.

According to the State Bank of Pakistan, the defaulters owe more than $4 billion dollars to these financial institutions both in the government and financial sectors. Most of the borrowers are influential industrialists and landowners with links to the country's major political parties and the civil and military bureaucracy.

Despite a nationwide campaign, the military government has recovered less than 15 percent of the loans. When the campaign first began in October last year, army teams arrested several major defaulters but they stopped the raids after they failed to prove the charges in the court.

"The government has now restarted its campaign with full preparation," says the Star newspaper while reporting the arrest of Lakhani brothers.

According to the newspaper, the country's top military commander reviewed the evidence the army investigation teams had collected against the defaulters and approved the new campaign.

Another influential Pakistani newspaper, The Dawn, reports that more defaulters will be arrested from Thursday.